Smith v. Navy Federal Credit Union

United States District Court, E.D. Virginia, Alexandria Division

December 16, 2014

HOWARD A. SMITH, Plaintiff,v.NAVY FEDERAL CREDIT UNION, Defendant.

MEMORANDUM OPINION

LIAM O'GRADY, District Judge.

This matter comes before the Court on Defendant Navy Federal Credit Union's Motion to Dismiss the Complaint (Dkt. No. 8). Pro se Plaintiff Howard Smith has filed his response, to which Defendant replied. For the reasons set forth below, the motion is GRANTED IN PART and DENIED IN PART.

I. Background

In October 2008, Smith entered into a loan agreement with Navy Federal Credit Union ("Navy FCU") for a property located in Naperville, Illinois. His monthly mortgage payment is $2, 151.29. Smith was called into active duty with the U.S. Navy on October 11, 2011 and has remained on active duty ever since. From December 2011 to August 2014, Smith was stationed at the Naval Station Great Lakes, which was an hour's drive from his Naperville residence.

In August 2014, Smith was ordered to execute a Permanent Change of Station ("PCS") to the Washington Navy Yard in DC. He listed the Illinois home for sale and moved to Reston, Virginia on September 1, 2014. The monthly rent for the new family home, which he occupies with his wife and two daughters, is $3, 000, bringing his monthly obligations for housing to $5, 151.29. In September, Smith sent a letter to Navy FCU explaining "his ability to pay the mortgage was impacted because of his military service pursuant to [SCRA] § 533." Compl. ¶ 32. He enclosed a copy of his PCS orders and requested Navy FCU to suspend all payments for a period of nine months and asked them to reduce the interest rate to 0%.

Shortly thereafter, Smith received a phone call from a Navy FCU representative asking him to provide a copy of his initial orders calling him to active duty, which he did. A week later, Navy FCU responded that they were "unable to process [the] request for relief under the SCRA [because t]he documentation submitted does not meet the SCRA requirements for protection." Id. at ¶¶ 43-44.

Smith has requested the Court to enter anticipatory relief under SCRA § 591. He specifically asks that his interest rate be reduced to 0%, and that his Navy FCU mortgage payments be suspended for nine months, or until the home is sold, whichever comes sooner.

II. Legal Standard

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of the complaint. See Randall v. United States, 30 F.3d 518, 522 (4th Cir. 1994). In reviewing a Rule 12(b)(6) motion to dismiss, the Court must accept as true all well-pleaded allegations and read the factual allegations in the light most favorable to Smith. Id. To survive the motion, the complaint "must contain sufficient factual matter... to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must not only allege but also "show" Smith is entitled to relief. Iqbal, 556 U.S. at 679.

III. Analysis

Navy FCU has moved to dismiss Smith's complaint for failure to state a claim upon which relief may be granted. As Smith is proceeding pro se, Navy FCU concedes that his complaint must be construed liberally.

A. Section 597a of the SCRA Is Jurisdictional.

Navy FCU has moved to dismiss Smith's § 597a claim stating that he has not alleged that Navy FCU "violated the SCRA in any manner...." Navy FCU Mem. Supp. Mot. Dismiss ("Navy FCU Mem.") at 6. Smith states that he cited to § 597a to establish the Court's jurisdiction over the matter "out of an abundance of caution." Smith Mem. Opp'n Mot. Dismiss ("Smith Opp'n"); Compl. ¶ 2. He has otherwise not responded to Navy FCU's assertion that he has not stated a claim under § 597a.

Section 597a establishes a private right of action, allowing "[a]ny person aggrieved by a violation of this Act... [to] obtain any appropriate equitable or declaratory relief...." 50 U.S.C. app. § 597a. The Fourth Circuit has held it to be a jurisdictional provision. Gordon v. Pete's Auto Serv. of Denbigh, Inc., 637 F.3d 454, 461 (4th Cir. 2011). The substantive provision under which Smith seeks relief, § 591, is discussed below. Notably, some federal courts, including this one, have allowed a servicemember to seek relief under § 591 via a civil suit against the mortgage lender. See Newton v. Bank of McKenney, 2012 WL 1752407, at *10 (E.D. Va. May 16, 2012) (allowing § 591 claim against mortgage lender ...

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